The general transcription factor, TFIID, consists of the TATA binding protein (TBP) associated with a series of TBP-associated factors (TAFs) that together participate in the assembly of the transcription preinitiation complex. The largest TFIID component, TAF1 has both acetyltransferase (AT) and kinase activities. We demonstrated previously that TAF1 is necessary for the transcription of an MHC class I gene, and that its intrinsic acetyltransferase activity is essential for both in vitro transcription of naked DNA and in vivo transcription. Of particular interest, MHC class I transcription is inhibited, both in vitro and in vivo, by the transactivator, HIV Tat, which we demonstrated binds to the TAF1 AT domain and inhibits its enzymatic activity. Similarly, TAF7, a 55 kD TFIID component, binds to TAF1 and inhibits its AT activity, resulting in repression of MHC class I transcription. Thus, TAF7 is an intrinsic regulator of transcription. It is released from TFIID , relieving the repression of the TAF1 AT activity and allowing transcription initiation. Our studies determined that after its dissociation from the PIC, TAF7 functionally interacts with both the general transcription factor TFIIH and the elongation factor P-TEFb. Association of TAF7 with TFIIH inhibits its CDK7 kinase activity with the resultant inhibition of TFIIH-mediated phosphorylation of the Pol II CTD Ser-5; binding of TAF7 to the P-TEFb elongation complex inhibits its phosphorylation of Ser-2 of the Pol II CTD. Importantly, we have shown that TAF7 functions in vitro to inhibit transcription at steps after PIC assembly and in vivo co-localizes with P-TEFb and Pol II downstream of the promoter. Thus, in addition to its role in transcription initiation as a TFIID component, TAF7 also functions in the transition from PIC assembly to initiation and elongation. We propose a novel model in which TAF7 regulates the orderly progression of events in transcription, preventing transcription elongation until the steps of transcription initiation are completed and the transcription elongation complex (TEC) is fully assembled. In addition to the regulatory role it plays in TFIID, TAF7 also functions to regulate TAF1-independent transcription. The first evidence for this came from our observation that TAF7 exists in a TFIID-independent form that coelutes with complexes in the 230 Kd range on gel filtration. Interestingly, the kinetics and spectrum of genes affected by siRNA mediated depletion of TAF7 or TAF1 differs between the two. This finding supports the conclusion that TAF7 functions at multiple points in transcription initiation, not just in PIC assembly. The importance of TAF7 in regulating normal transcription is documented by our finding that cells depleted of TAF7, by siRNA or shRNA technology, proliferate poorly. Consistent with the critical role of TAF7 in cell growth, expression profiling reveals that depletion of TAF7 by siRNA results in reduced expression of a large number of genes. To further examine the role of TAF7 in global gene regulation and development we have generated conditional TAF7 knock-out mice. Complete ablation of TAF7 results in embryonic lethality; embryos do not develop beyond d.3-4. Excision of TAF7 in MEFs derived from conditional knock-outs results in aborted cell proliferation and a global reduction in transcription initiation. TAF7 is also essential for the differentiation of immature thymic precursors that undergo massive proliferation during their differentiation. Thus, TAF7 deletion mediated by cre, expressed under the control of the Lck promoter that functions in very early DN thymocytes, ablates all T cell development. In sharp contrast, TAF7 is not required for the subsequent proliferation-independent differentiation of lineage committed thymocytes. Deletion of TAF7 by cre under the control of a EIII8 enhancer, which only functions at the DP stage of thymocyte development spares the maturation of single positive cells which are able to egress into the periphery. However, although only a small number of transcripts is affected by TAF7 deletion, TAF7-deficient peripheral T cells are not able to undergo activation and expansion in response to antigenic stimuli,. We conclude that TAF7 plays a critical role in transcription in cells that undergo proliferation, but that its role is more restricted in non-proliferating differentiated cells.